The grains complex jumpstarted the week in the green as hot, dry forecasts for the last week of August dominated headlines. Corn high-jumped back over the $5 per bushel handle while soybeans cruised past $14 per bushel. While some corn crops may be at risk for premature death from the heat, for the latter oilseed crop, this time of year is more critical to the development of the pods (and plant growth in general).
The hot weather on both sides of the 49th parallel is speeding up crop development— ripening cereals, green seed levels dropping in canola, soybean plants aborted pods, and corn tip-back (where the full cob isn’t filled with kernels). Although the hot, hot weather isn’t necessarily hitting Western Canada, the canola market is following its oilseed brethren higher despite expectations of a record crop. The question now becomes, has the market found the spot where the prices make sense?
While ice cream, sprinklers and backyard pools are popular right now, Drew Lerner from World Weather Inc. says the opposite end of the temperature gauge will be important to watch too. The potential for lower temperatures at night continues to build (also helping the markets higher) as signs of an earlier-than-usual frost continue to show up. This includes ice accumulation in the Arctic well ahead of recent years and sudden below freezing nights in some places in Saskatchewan, Alberta, North Dakota, Minnesota and Wisconsin. Already, there’s been talk of the 1974 Labour Day weekend freeze that was devastating to crops and while the same sort of run-up to that early frost isn’t happening right now, conditions are building that make the potential for a damaging freeze higher than usual.
Although the wheat harvest is underway and looking pretty good, wheat is getting help from the international buying scene as Saudi Arabia and Egypt have bought one million tonnes in the last week. Less of the wheat may be coming from traditional growers such as the United States and Canada as producers continually are looking at more profitable crops like corn and soybeans. Specifically, producers in Minnesota and North Dakota are switching out more King Wheat acres for corn and soybeans as genetic engineering has made the latter two crops easier to grow and usually yield better. The difference in yield growth over the past couple decades has even the president of the Minnesota Wheat Growers Association calling for GMO in wheat.
And finally, Pro Farmer’s recent crop tour says that a record U.S. corn crop will be produced (13.46 billion bushels), with the average yield around 154.1 bushels per acre (USDA at 13.74 Billion bushels on 154.4 bushels per acre). As for soybeans, the firm is expecting the fourth-largest soybean crop ever with 3.158 Billion bushels on average yields of 41.8 bushels per acre (USDA at 3.14 billion bushels on 42.6 bushels per acre). There continues to be many weather factors that point to upside in the market but this does not necessarily mean sustained high prices. With the technology these days, you can do a little bit more with your time in the cab of your combine. Thus, taking advantage of high prices would make sense as you can be productive in more ways than one on the field these days.
Brennan Turner is originally from Foam Lake, Sask., where his family started farming the land in the 1920s. His weekly column is a summary of his free, daily market note, the FarmLead Breakfast Brief. He can be reached via email (b.turner@farmlead.com) or phone (1-855-332-7653).
— FarmLead Breakfast Brief